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The Covid pandemic has accelerated the growth of digital technologies and many companies are now beginning to take a serious look at new ways of investor engagement and marketing, utilising the digital world to Increase brand awareness and expanding reach, opening the door to growth opportunities which might otherwise not be visible.
While it might be fair to suggest that most mega-cap companies will have more information to communicate (and more stakeholders to communicate with) than the average small-to-mid-cap, it is certainly the case that they are better resourced to meet the changing needs of investors. For companies that do not have a dedicated IR function – or large discretionary budgets to play with – this new approach to investor engagement can be intimidating.
However, smaller companies also have certain advantages. They may be able to tell a more tightly focused story than the sprawling behemoths of the Fortune 500 and they may find it easier to create and communicate a genuine company culture. Put simply, the IR and Marketing budget of an SME may be small, but that does not mean that their value-creation story cannot be told in a compelling, credible, and effective way.
A problem faced by small companies everywhere is that declining numbers follow or analyse them. This is a vicious circle where if a company is already listed, the lack of analyst coverage leads to thinner liquidity and declining market capitalisations with companies often having to pay analysts to cover them. If not listed, lack of visibility leads to lack of investment opportunities.
What small companies are crying out for is nothing less than a revolution in investor engagement. So, what, then, are the key requirements?
For companies:
- Stakeholder communications - potential and current
- Secure communications with investors/potential investors
- Ability to communicate securely with shareholders
- Maximising shareholder awareness
- Increased visibility to investors
- Making use of existing content
- Integration with other communication platforms
- Integration with CRM and other workflow tools
For investors:
- instant notifications when companies they follow are raising capital.
- Criteria matching
- Ability to monitor sector
- Ability to monitor companies
- Ability to communicate securely with company
When SMEs think of digital tools for reaching out to potential investors they think of LinkedIn, Twitter and Facebook and similar products. A substantial portion of Linkedin’s revenue is derived from recruiters purchasing subscriptions and job postings and excellent platform though it is, LinkedIn does not, we think, easily lend itself to investor outreach.
Twitter and Facebook are often used by companies to announce key information to investors. In the USA, the SEC has ruled that companies may use social media such as Twitter and Facebook to announce key information, in compliance with Regulation Fair Disclosure (Regulation FD), so long as investors have been alerted about which social networks will be used to disseminate such information.
However, there is a big difference between social media and purpose-built platforms which are engineered for driving greater investor engagement and not for social interaction.
Investors too want to engage remotely and digitally but not via social media and email.
Blair McPherson, founder of Senasen Group which has developed a SaaS solution that addresses the challenges addressed above, states that “a solution to investor relations inefficiencies must meet the specific and unique requirements of both companies and investors at the same time and on the same platform. A company that builds a great website provides little utility for investors around the world who need to search and sift through hundreds of different company websites to find information and then hope to make a connection via a contact form. And likewise, companies do not want to be completely dependent on intermediaries to find and connect with investors. We believe and are proving that a technology platform specifically designed for both investors and companies can connect people, capital & insights far more efficiently”.
